Company Overview: Botanix Pharmaceuticals Limited, formerly Bone Medical Limited, is a pharmaceutical company. The Company focuses on developing medical dermatology products for dermatologists and their patients. Its segments include Research & Development and Corporate. The Company's products and pipeline products are all based on drug delivery technology known as Permetrex, which helps solve the challenge of delivering active pharmaceutical ingredients across the skin. The Company's products, which are under development, are focused on modulating the body's endocannabinoid system of receptors which regulates skin function, growth and renewal. Its product pipeline includes BTX1503, BTX1308 and BTX1204. Its BTX1503 is a transdermal gel formulation used for the treatment of serious acne in adults and teenagers. Its BTX1308 is a transdermal gel formulation used for the treatment of plaque psoriasis. Its BTX1204 is a transdermal gel formation used for the treatment of atopic dermititis.


BOT Details

Botanix Pharmaceuticals Ltd (ASX: BOT), an emerging global medical dermatology company, is into the development of therapeutics for the treatment of serious skin diseases in Australia. The company offers BTX 1503, which is a transdermal gel formulation for the treatment of serious acne in adults and teenagers; BTX 1308, which is a transdermal gel formulation for the treatment of plaque psoriasis; BTX 1204, which is a transdermal gel formation for the treatment of atopic dermatitis; and BTX 1701, a new product offering for mild acne. The group is expected to benefit from the on-going clinical studies and is expected to report top line results.

Next steps of clinical development strategy for BTX 1503: BTX 1503 addresses all the three key pathologies of acne. They have anti-inflammatory effects on human sebocytes and to suppress sebocyte proliferation, they have potent anti-microbial activity against gram-positive bacteria and inhibit human keratinocyte proliferation, through a non CB1/CB2 mechanism. BTX 1503 has outperformed other leading acne products. The  4 week study data has showed a marked reduction in inflammatory lesions, which is greater than any other FDA approved topical acne product. Over the 4 week treatment course, the newly processed images from the Phase 1b acne patient study, reflects a clear anti-inflammatory effect. The Phase 2 study, which is 12-week randomised, double-blind, vehicle controlled study will evaluate the safety and efficacy of BTX 1503 in patients with moderate to severe acne. This has already commenced in July 2018, and is fully funded and will take approximately 12 months to complete. BOT is pursuing a rapid clinical development strategy to boost product commercialization and timing to report first set of revenues.


BTX 1503: acne –next steps (Source: Company Reports)

Gearing for Phase 2 for BTX 1204: BOT has planned to kick start the Phase 2 for BTX 1204 in the coming weeks. Meanwhile, both Atopic dermatitis (AD) and psoriasis are T-cell mediated inflammatory diseases of the skin. The study of Cannabidiol reflects that it inhibits immune responses through T-helper cell populations (including Th17,Th1 and alsoTh2) and to a decrease of IFN-γ amongst others. BTX 1204 meets a number of needs, that include, non-steroidal treatment option, potential impact of itch, improved safety profile and elimination of severe adverse side effects, ability to use long term (>12 weeks), address underlying inflammation, correct skin barrier dysfunction and has greater cost effectiveness. The Phase 1b study design was concluded in late May 2018. The results of Phase 1b study data showed that BTX 1204 was twice as effective over the vehicle (with efficacy still increasing) and substantial improvement in the key signs of AD observed, which means, BTX 1204 has potential for increased efficacy and can potentially exceed the industry performance. Further, despite being a small study, BTX 1204 has showed superiority over vehicle, starting at early time points. This is the first vehicle-controlled study for BOT, that also supports potential for other pipeline products. During the September quarter, BOT had successfully conducted a Pre-Investigational New Drug (Pre-IND) Meeting with the FDA’s Division of Dermatology and Dental Products for its product BTX 1204. The meeting has provided the company with an opportunity to seek clarification and support from the FDA on the data package and development plan that are required to commence the Phase 2 clinical studies in Australia and the US. Along with this, it will enable the company to get consensus from the FDA on the required drug development plan for BTX 1204 to support a New Drug Application (NDA). Currently, the company is well advanced for the finalization of the necessary logistical and regulatory arrangements that are required to support the scheduled commencement of a Phase 2 clinical trial. Phase 2 study design is the 12 week randomised, double-blind, vehicle controlled study meant for the evaluation of the safety and efficacy of BTX 1204 in patients with moderate AD. Overall, BTX 1204 complements existing products in development, which will pave path for faster development and transition times through key regulators (FDA and DEA).


BTX 1204: atopic dermatitis – next steps (Source: Company Reports)

Phase 1b study commenced in November CY2018 to test BTX 1308 related with psoriasis: BOT has commenced Phase 1b study to test BTX 1308 against vehicle and a marketed psoriasis drug in patients in November CY2018 with the treatment of the first patient. The study comprised of testing a new formulation of synthetic cannabidiol combined along with the company’s new Permetrex skin delivery technology. This Phase 1b patient study is being conducted in partnership with international psoriasis model experts, Bioskin GmbH. Further, Bioskin has an internationally recognition for their experience with the ‘psoriasis plaque test’, which is clinically validated and utilised by multiple number of leading dermatology companies. The study is structured to assess the safety and efficacy of BTX 1308 on psoriasis plaques or lesions, that has the ability to compare multiple formulations, and test products at the same time, and on the same patient, which means that the treatment duration can be shortened, while the quality of data can also be increased. The study also represents the third clinical program to start within 12 months for Botanix, which reflects the company's ability to accelerate the addition of clinical programs across a range of skin diseases. Moreover, BTX 1308 offers a potential treatment that will answer three needs with a safety profile that ensures that it can be used for long periods in adolescents and adults. The study is anticipated to take approximately 3 to 4 months to complete and data is projected to be available in 1Q CY2019. On the other hand, BTX 1308 psoriasis’ target market is approximately 7.5m Americans that have psoriasis (most of them have plaque psoriasis). The market size is estimated annual costs of injectable biologic treatments in the US are ~US$20bn p.a. The current issues is that the biologic drugs are expensive and have serious side effect issues and there is unmet needs of safe and effective topical product for mild to moderate psoriasis.

Completed pre-clinical testing of antimicrobial BTX 1801: During the September quarter, BOT had successfully completed the pre-clinical testing of BTX 1801, which is a novel antimicrobial. The results of the pre-clinical testing showed that BTX 1801 is very effective at killing methicillin-resistant staphylococcus aureus strains of bacteria when compared to Permetrex or cannabidiol alone. The synergistic response observed reflects the potential for BTX 1801 to treat both acute and chronic skin infections. This along with the inherent anti-inflammatory properties of cannabidiol may increase the value of BTX 1801 to be the antimicrobial of choice for the treatment of skin infections. BTX 1801,which is a novel antimicrobial having the potential to address unmet needs in serious skin infections, and has significant market opportunities. The study results also showed that the delivery of cannabidiol with Permetrex can reduce the concentration of the active drug required for the achievement of the highest levels of bacterial killing. During the September quarter, BOT has focused on the completion of a market review and commercial assessment, in conjunction with key opinion leaders, for the identification of the preferred type of skin infection to target initially for BTX 1801, before starting on clinical development.

Cash flows in the September Quarter: For the September quarter, the cash outflows on R&D activities were approximately A$2.6m, and had a focus on developing key clinical programs. The company’s focus is on investment in the development of clinical programs, rather than administrative overheads. At the end of the quarter, BOT held A$14.2m in cash, and has now received approximately A$4.6m as the R&D tax incentive refund this month.

Future Outlook: For the coming quarter, the forecast cash outflows are estimated to be approximately A$5.35m with approximately A$4.75m planned to be spent on R&D, and this primarily will be spent on the two Phase 2 clinical trials (BTX 1503 for acne and BTX 1204 for atopic dermatitis), Phase 1b patient study for BTX 1308 (psoriasis) and progressing other pipeline products (including BTX 1801 for bacterial skin infections). Over the year, BOT expects significant clinical and operational milestones across multiple programs.


Key catalysts (Source: Company Reports)

Stock Recommendation: BOT stock has fallen 21.43% in three months as on November 22, 2018 to A$0.082. The stock has support at $0.075 and resistance at $0.11. BOT looks to be the only company that is undertaking well-controlled FDA regulated studies in skin disease and is now leading this research area globally. BOT has commenced Phase 2 clinical trial with BTX 1503 in June 2018 and these are expected to be complete by mid-2019. The Phase 1b BTX 1204 atopic dermatitis patient study had ended in June 2018 and preparation is undergoing for a Phase 2 clinical trial. The Phase 1b BTX 1308 psoriasis patient study has just commenced in September 2018. The results of these tests and any potential collaboration can help the stock going forward with boost also coming from the cannabis industry at large. Based on the prospects, we give a “Speculative Buy” recommendation on the stock at the current price of $ 0.082, up 6.5% on November 23, 2018.


BOT Daily Chart (Source: Thomson Reuters)

 
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